Employers are grasping the importance of adequate default funds and ensuring employees understand their investment choices, says Debbie Lovewell
More than three-quarters of respondents that offer a defined contribution (DC) pension scheme include at least one default investment fund for staff who do not choose to make active investment decisions. Some 79% of this year’s respondents fully grasp the investment strategies of their default fund, which is down from the 90% who said so in 2010.
Encouragingly, about 90% of respondents review the investment aims and strategies of their schemes’ default funds. This is vital if employers are to ensure all staff have the option of a good investment fund.
Even if employees do not want to make active investment decisions and opt for a default fund, they need a broad understanding of their investment choices, and how employers educate them in this area is key to achieving this. As in previous years, most education appears to use more passive methods, such as providing online or printed materials.
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